Exhibit 10.38
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of May 25, 2000, is made by and between
Xxxxxxxxxx.xxx, Inc., a Delaware corporation (the "EMPLOYER"), and Xxxxxxx X.
XxXxxxx (the "EMPLOYEE").
WHEREAS, the Employer wishes to retain the services of the Employee in
order to avail itself of the Employee's executive and managerial skills, and the
Employee is willing to provide his services to the Employer on the terms set
forth herein; and
WHEREAS, the Employer and the Employee desire to amend and restate in
its entirety the existing employment agreement, dated as of April 9, 1999,
between the parties (the "EXISTING AGREEMENT").
NOW, THEREFORE, the parties agree that the Existing Agreement be and
hereby is amended and replaced in its entirety as follows:
Section 1. FREEDOM TO CONTRACT.
The Employee represents that he is free to enter into this Agreement,
and that he has not made and will not make any agreements in conflict with this
Agreement. The Employee will not, and the Employer will not require the Employee
to, disclose to the Employer, or use for the Employer's benefit, any trade
secrets or confidential information now or hereafter in the Employee's
possession which is the property of any other party.
Section 2. EMPLOYMENT.
The Employer hereby employs the Employee, and the Employee hereby
accepts his employment by the Employer, upon the terms and subject to the
conditions set forth herein.
Section 3. EFFECTIVE DATE AND TERM.
This Agreement shall take effect as of April 25, 2000 (the "Effective
Date"), and shall continue in full force and effect until terminated in
accordance with Section 6 hereof.
Section 4. TITLE AND DUTIES; EXTENT OF SERVICES.
The Employee shall promote the business and affairs of the Employer as
Chairman of the Board of Directors of the Employer (the "Board") and, in such
capacity, shall perform such duties and undertake such activities as the Board
shall reasonably request from time to time. The Employee shall devote such time
and effort as may be required to fulfill his responsibilities under this
Agreement; provided, however, that the Employee may engage in such other
business activities outside the scope of his employment hereunder as will not
materially adversely affect the Employee's ability to perform his obligations
under this Agreement.
Section 5. COMPENSATION AND FRINGE BENEFITS.
Section 5.1. BASE SALARY. In consideration of the services rendered by
the Employee under this Agreement, the Employer shall pay the Employee an
initial base salary (the "Base Salary") at an annual rate of Three Hundred
Twenty-Five Thousand Dollars ($325,000), payable in arrears bi-weekly (or on
such other payment schedule as the Employer shall have reasonably implemented
with respect to the payment of its other salaried employees), such Base Salary
being subject to increase at the discretion of the Board.
Section 5.2. BONUS. The Employer may pay the Employee such bonus, if
any, with respect to any fiscal year as the Board may determine from time to
time, provided that such bonus shall not exceed 50% of the Employee's Base
Salary for such year.
Section 5.3. FRINGE BENEFITS. The Employee shall be entitled to such
insurance, health insurance and other fringe benefits as may be offered or
generally made available by the Employer to its executive officers.
Section 6. TERMINATION; CHANGE OF CONTROL.
Section 6.1. TERMINATION OF EMPLOYMENT.
(a) The Employee's employment hereunder shall terminate upon
the Employee's death or Permanent Disability. For purposes of this
Agreement, "Permanent Disability" shall mean the Employee's inability
to perform his duties hereunder for a continuous period of six (6)
months by reason of his physical or mental illness or incapacity. In
the event of any dispute concerning the existence of a Permanent
Disability, such question shall be determined by a licensed physician
selected by the Employer and reasonably acceptable to the Employee,
whose determination shall be final and binding upon the parties. The
Employee shall submit to such examinations and furnish such information
as such physician may reasonably request.
(b) The Employee's employment hereunder may also be
terminated:
(i) By the Employee at any time upon at least thirty
(30) days prior written notice to the Employer, or upon such
shorter written notice as shall be accepted by the Employer;
or
(ii) By the Employer at any time upon at least thirty
(30) days prior written notice to the Employee, or upon such
shorter written notice as shall be accepted by the Employee;
or
(iii) By the Employee at any time for good reason,
including but not limited to:
(A) failure of the Employer to continue to
employ the Employee as Chairman of the Board of
Directors of the Employer; or
(B) material diminution of the Employee's
responsibilities, duties or authorities as Chairman
of the Board of Directors of the Employer, or
assignment to the Employee of any responsibilities or
duties inconsistent with such position; or
(C) failure of the Employer to pay and
provide to the Employee the compensation provided for
herein; or
(iv) By the Employer at any time for cause, including
but not limited to:
(A) the Employee's gross negligence or
willful misconduct with respect to the business and
affairs of the Employer; or
(B) the Employee's material breach of this
Agreement; or
(C) the commission by the Employee of an act
involving moral turpitude or fraud; or
(D) the Employee's conviction of any felony.
(c) Unless earlier terminated pursuant to the terms hereof,
the Employee's employment hereunder shall terminate upon the occurrence
of an Acquisition or Change in Control (each as defined below).
(d) For purposes of this Agreement:
(i) the term "Acquisition" shall mean (A) a merger,
consolidation or similar transaction in which securities
possessing more than 50% of the total combined voting power of
the Employer's outstanding securities are transferred to a
person or persons different from the persons who held those
securities immediately prior to such transaction or (B) the
sale, transfer, or other disposition of all or substantially
all of the Employer's assets to one or more persons (other
than any wholly owned subsidiary of the Employer) in a single
transaction or series of related transactions; and
(ii) the term "Change in Control" shall mean a change
in ownership or control of the Employer effected through
either of the following transactions: (A) any person or
related group of persons (other than the
Employer or a person that directly or indirectly controls, is
controlled by, or is under common control with the Employer)
directly or indirectly acquires beneficial ownership
(determined pursuant to Rule 13d-3 promulgated under the
Securities Xxxxxxxx Xxx 0000, as amended) of securities
possessing more than 50% of the total combined voting power of
the Employer's outstanding securities pursuant to a tender or
exchange offer made directly to the Employer's stockholders,
or (B) over a period of 36 consecutive months or less, there
is a change in the composition of the Board such that a
majority of the Board members (rounded up to the next whole
number, if a fraction) ceases, by reason of one or more proxy
contests for the election of Board members, to be composed of
individuals who either (I) have been Board members
continuously since the beginning of such period, or (II) have
been elected or nominated for election as Board members during
such period by at least a majority of the Board members
described in the preceding clause (I) who were still in office
at the time such election or nomination was approved by the
Board.
The provisions of Sections 6.2, 6.3, 7, 8, 9 and 10 hereof shall survive any
termination of the Employee's employment hereunder and shall continue in effect
until such time as all obligations of the parties described therein have been
satisfied.
Section 6.2. COMPENSATION FOLLOWING TERMINATION; SEVERANCE PAY.
(a) Subject to Section 6.2(c), if the Employee's employment is
terminated pursuant to Section 6.1(a) or 6.1(b)(iv) or, prior to August
1, 2000, pursuant to Section 6.1(b)(i) hereof unless the Employer has
first received written commitment from one or more persons with respect
to an aggregate financing of at least $50 million, the Employee shall
not be entitled to compensation, severance pay or fringe benefits
beyond the date upon which he ceases to be employed hereunder (the
"Employment Termination Date") except as may be otherwise provided in
any then existing insurance, health or other benefit programs of the
Employer.
(b) Subject to Section 6.2(c), if the Employee's employment is
terminated for any reason other than pursuant to Section 6.1(a),
6.1(b)(iv) or 6.1(c) or, prior to August 1, 2000, pursuant to Section
6.1(b)(i) hereof unless the Employer has first received written
commitment from one or more persons with respect to an aggregate
financing of at least $50 million, the Employee shall be entitled to
receive an amount equal to the Base Salary (as in effect on the
Employment Termination Date) that would be paid to the Employee for a
period of six (6) months if the Employee were still employed by the
Employer during such period. During the six-month period following the
Employment Termination Date, the Employer, at its cost, shall also
continue to provide, or arrange to provide, the Employee and his
dependants with such insurance, health and other fringe benefits (such
as payment or reimbursement for gasoline and cellular phone expenses)
as were provided to the Employee immediately prior to the Employment
Termination Date (or substantially comparable benefits if a
continuation
of benefits is not permitted under then existing insurance, health or
other benefit programs of the Employer), such benefits to be provided
to the same extent and under the same terms and conditions as if the
Employee were still employed by the Employer during such period.
(c) If the Employee's employment is terminated pursuant to
Section 6.1(a) or, prior to August 1, 2000, pursuant to Section
6.1(b)(i) hereof if the Employer has not first received written
commitment from one or more persons with respect to an aggregate
financing of at least $50 million, the Employer may, in its sole
discretion, determine that the Employee shall receive up to the full
payment amount and benefits set forth in Section 6.2(b) above,
including benefits specified in Section 6.2(b) for a period of up to
six (6) months commencing on the Employment Termination Date, such
benefits to be provided to the same extent and under the same terms and
conditions as if the Employee were still employed by the Employer
during such period.
(d) If, on or before December 31, 2000, the Employee's
employment terminates pursuant to Section 6.1(c), the Employee shall be
entitled to receive an amount equal to the Base Salary (as in effect on
the Employment Termination Date) that would be paid to the Employee for
a period of twenty-four (24) months if the Employee were still employed
by the Employer during such period. Additionally, the Employer shall
continue to provide the Employee and his dependants with all of the
benefits set forth in Section 6.2(b) above for a period of twenty-four
(24) months commencing on the Employment Termination Date, such
benefits to be provided to the same extent and under the same terms and
conditions as if the Employee were still employed by the Employer
during such period.
(e) Notwithstanding any other provisions of this Agreement, in
the event that any payment or benefit received or to be received by the
Employee pursuant to any of the foregoing subsections of this Section
6.2 (all such payments and benefits, the "Total Payments") is
determined to be subject, in whole or part, to Excise Tax (as defined
below), then the Employee shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by
the Employee of all taxes (including any interest or penalties imposed
with respect to such taxes), including without limitation any income
taxes and Excise Tax imposed upon the Gross-Up Payment, the Employee
retains an amount equal to the Total Payments. All determinations
required to be made under this Section 6.2(e), including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such
determination, shall be made by the Employer's accountants or such
other certified public accounting firm reasonably acceptable to the
Employer as may be designated by the Employee, which shall provide
detailed supporting calculations both to the Employer and the Employee.
For purposes of this Agreement, the term "Excise Tax" shall mean the
tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended from time to time.
(f) Any payments made by the Employer to the Employee under
this Section 6.2 shall be made in a single, lump-sum payment upon the
Employment Termination Date (or, in the case of a termination pursuant
to Section 6.1(b)(iii), within five (5) days following the Employment
Termination Date), and, for purposes of clarification, any such payment
shall be in addition to all compensation and benefits payable to the
Employee through the Employment Termination Date pursuant to the terms
of this Agreement or any compensation or benefit plan, program or
arrangement maintained by the Employer. Any medical benefits coverage
provided by the Employer to the Employee or his dependents under this
Section 6.2 is not intended to qualify as health insurance continuation
coverage required pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") and will not be charged against
the COBRA continuation period. Instead, the Employee's, and his or her
dependents', opportunity to elect COBRA continuation at their expense
for the entire period otherwise allowed by law as a result of the
Employee's termination of employment will begin at the end of the
benefits continuation.
Section 7. PROVISIONS OF GENERAL APPLICATION.
Section 7.1. DISPUTES. In the event of any dispute touching or
concerning this Agreement, the parties will submit to the exclusive jurisdiction
and venue of any court of competent jurisdiction sitting in Suffolk County,
Massachusetts, and the parties agree to comply with all requirements necessary
to give such court jurisdiction over the parties and the controversy. EACH PARTY
HEREBY WAIVES ANY RIGHT TO A JURY TRIAL AND TO CLAIM OR RECOVER PUNITIVE
DAMAGES.
Section 7.2. GOVERNING LAW. This Agreement and the rights and
obligations of the parties hereunder shall be construed, interpreted and
determined in accordance with the internal substantive laws of the Commonwealth
of Massachusetts (excluding choice of law or conflict of law provisions).
Section 7.3. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be an original and all of which, taken
together, shall constitute one and the same document. In making proof of this
Agreement it shall not be necessary to produce or account for more than one such
counterpart.
Section 7.4. OTHER AGREEMENTS. This Agreement represents the entire
understanding and agreement between the parties as to the subject matter hereof
and supersedes all prior or concurrent oral or written agreements relating
thereto except for the Invention and Non-Disclosure Agreement and the
Non-Competition and Non-Disclosure Agreement between the Employer and the
Employee.
Section 7.5. AMENDMENT. This Agreement may be amended only by a written
document executed in one or more counterparts by each of the parties hereto.
Section 7.6. WAIVER. No consent to or waiver of any breach or default
in the performance of any obligation hereunder shall be deemed or construed to
be a consent to or waiver of any
other breach or default in the performance of any of the same or any other
obligation hereunder. Failure on the part of either party to complain of any act
or failure to act of the other party or to declare the other party in default,
irrespective of the duration of such failure, shall not constitute a waiver of
rights hereunder and no waiver hereunder shall be effective unless it is in
writing, executed by the party waiving the breach or default hereunder.
Section 7.7. ASSIGNMENT. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their successors and assigns. This
Agreement may be assigned by the Employer to any Affiliate (as hereinafter
defined) or to a successor to the portion of its business to which this
Agreement relates (whether by purchase or otherwise). For purposes of this
Agreement, "Affiliate" shall mean any person or entity which, directly or
indirectly, controls or is controlled by or is under common control with the
Employer and, for the purposes of this definition, "control" (including the
terms "controlled by" and "under common control with") shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of another, whether through the
ownership of voting securities or holding of office in another, by contract or
otherwise. The Employee may not assign or transfer any of his rights or
obligations under this Agreement.
Section 7.8. NOTICES. For the purpose of this Agreement, notices and
all other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by a reputable
overnight delivery company or by United States certified or registered mail,
return receipt requested, postage prepaid, addressed (i) if to the Employer, to
Xxxxxxxxxx.xxx, Inc., 00 Xxxxxxxxx Xxxxxx, Xxxxxxxx, XX 00000, Attn: President,
(ii) if to the Employee, to the most current address of the Employee reflected
in the books and records of the Employer, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon actual receipt.
Section 7.9. HEADINGS. The headings of sections and subsections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be a part of this Agreement or to affect the meaning of any of its
provisions.
Section 7.10. SEVERABILITY. If any provision of this Agreement shall,
in whole or in part, prove to be invalid for any reason, such invalidity shall
affect only the portion of such provision which shall be invalid, and in all
other respects this Agreement shall stand as if such invalid provisions, or the
invalid portion thereof, had not been a part hereof.
IN WITNESS WHEREOF, this Agreement has been executed by the Employer,
by its duly authorized officer, and by the Employee, as of the date first set
forth above.
XXXXXXXXXX.XXX, INC.
By: /s/ Xxxx Xxxx
Xxxx Xxxx, Chairman of
the Compensation Committee
EMPLOYEE
/s/ Xxxxxxx X. XxXxxxx
Xxxxxxx X. XxXxxxx
